Accelerating a trend

As Optima’s administrators recommend the company be liquidated, I can’t help but think that repercussions for the local whitebox industry are going to be much deeper than I first feared. The reason why, in a word, is warranties.

Companies and individuals that have historically chosen to buy whitebox machines have had a number of motivations – they were usually a fair bit cheaper (although it has been well documented that this price differential is much smaller today than it used to be), smaller local manufacturers respond more quickly to demands for customisation and show more agility when new components become available, and there’s usually more personal pre- and post-sales service on offer from your friendly neighbourhood PC builder.

But for years the multinational manufacturers have chipped away at these perceptions, in part by spreading fear, uncertainty and doubt based on how long local manufacturers would be around to support the machines they were selling. Now those chickens are coming home to roost, and you can be sure there are plenty of ‘I told you so’ conversations taking place.

The demise of Optima will likely see local manufacturers eradicated from any federal, state and even local government contracts once a couple of horror stories start drifting through the corridors of departments that are left scrambling to solve support issues. Ditto big business.

The impact in the SMB market will be smaller… but there will still be an impact and it won’t be insignificant. Looking at the updated creditors’ list last week, the Leading Edge buying group alone has submitted a claim for $1 million relating to warranties over the next three years. While the chances of a payout may be only slightly more realistic than me beating Usain Bolt over the 100 metre dash, it does indicate the scale of the problem.

Lots of SMBs are likely to face headaches relating to the disappearance of Optima and it will be their local neighbourhood resellers that bear the brunt of the complaints. As those resellers look for alternate suppliers, I’d bet plenty of them will baulk at the idea of playing the local card and many will turn instead to one of the multinationals.

As I write this, funnily enough, IDC has just reported whitebox resurgence in the local x86 server market. Unbranded sales were up by 125 per cent year-on-year in the first quarter, enjoying particular success in small businesses with less than 10 employees. With a share of 4 per cent, this means one of every 25 servers in the Australian x86 market is a whitebox. This is significant enough to be impressive and yet too small to make it onto the radar of multinationals looking to grow their own share.

Something tells me the local PC market is headed down a similar path. In the glory days, which only really started receding about five years ago, whitebox machines accounted for half of local PC sales. Shrinking price differentials and the move to mobility have since seen that market share fall rapidly in recent years; Optima’s plight is likely to accelerate the trend.